Abstract:

The beginning of the twenty-first century has seen an upsurge in petroleum prices and an increased concern over greenhouse gas emissions. Consequently, the interest in biodiesel production has heightened. Policy at the Federal level, such as the blender’s tax credit which provides $1 for every gallon of biodiesel blended with regular diesel, lends substantial support to biofuel production. In 2007 the State of Oregon enacted laws which provide substantial incentives to promote oilseed production in the state for conversion into biodiesel fuel through 2012. In response to these actions, biofuels’ potential benefits and costs are being increasingly debated.
The purpose of this study is to understand the possible effects of subsidies on the composition of the Willamette Valley’s agricultural system in the aggregate and by general land/soil categories. A nonlinear mathematical programming model of the Willamette Valley’s agricultural system is constructed to account for 17 major soil types, 19 major crops, irrigated/non-irrigated production options, 11 crop rotations, and 3 major regions. Oilseeds are assumed to serve as rotations for other crops. Estimates of yield differentials over soil types, transportation costs by region, costs by soil types, yield-based costs, and prices (endogenous & exogenous), are major determinants in the model. Programmatic constraints include contract limits for certain crops and feasible crop rotations. Land use constraints by region, soil type, and irrigation availability are derived using a Geographic Information System (GIS) developed by the author drawing upon multiple sources. The model is programmed to run using GAMS (General Algebraic Modeling System).
The study finds that current oilseed subsidies are sufficient to induce oilseed production (approximately 240 million pounds total) on about 75 thousand acres, or about 7% of total the Willamette Valley’s land devoted to the production of its major and relatively-easily interchangeable crops. Iterations of the model demonstrate that fallow and wheat acres are the first to decline due to increased oilseed production and that there is minimal change in terms of crops shifting from being grown on one general soil class to another. If flax and camelina can be grown for two years in a row before needing a year’s rotation, production levels would double given current subsidies and land use changes would be more dramatic. The model developed as a result of this research effort has the potential to be modified and used for future studies.